Chase Koch on Principles, Music, and Overcoming Entropy | Conversations with Tyler

Thanks for having me on, Tyler. It’s an honor.

Yes, I definitely rejected it when I was 10 years old, I think like most 10-year-olds would. It was more than a lecture, just to put people in the room with me and my father and my sister. These were Sunday philosophy lessons, sometimes economics lessons. They were actually books on tape that he would play, whether it was Milton Friedman, or Hayek, or choose your philosopher. Every 10 minutes, he would stop the tape and then quiz us with questions to see if we were paying attention. My sister Elizabeth, she knew the answer. She was right in there. I was usually either half asleep or not paying attention. It wasn’t really until later on in life, call it my late 20s, that the principles really hit me. All the things that he’d been trying to teach me hit me at a visceral level. It was from me experiencing them myself. I’ll give you just one example when these principles really came to life for me. I was running our fertilizer international business, and we were trying to expand all over the world. Brazil was one of the most important import markets. We had a large trading business, and I was trying to expand it. We were opening up a new terminal to bring nitrogen fertilizers in with large ships and break bulk 30,000 tons to get to farmers. There was a new high-speed conveyor belt and a storage terminal and everything. The bureaucracy, the red tape, even the corruption that I, as a young business leader, felt, and what we thought would take under a year to build and get in market, took us over five. Just feeling that, I was like, “Ah, this is what my father has been telling me since I was 10 years old. We don’t want our country to go down this path. Protectionism, not thinking about things from a mutual benefit lens, barriers in business, holding people back.” All the things that he was teaching me came flooding to the front of my brain, and I was like, “I got it.” That was just one of many examples on why I became so passionate about the principles that my father was trying to teach me since I was a little kid.

It’s interesting, Tyler. I would say, he looks at everything through the lens of principles. Ever since I was a kid, whether it’s how he raised Elizabeth and raised me, how he treats my mother, how he does business, the things he’s trying to change in our country with all of our efforts and Stand Together to help people improve their lives, those principles, I’m 100 percent aligned on with him. There’s not something I could sit here and tell you, “I’m just so polar opposite my father on that.” What I will tell you is how I express them is different. He also taught me this, the principle of comparative advantage, which I think, of the 41 principles in the book, is maybe one of the most powerful. As you know, the principle of comparative advantage is really focusing on where—you can look at it from an individual standpoint. You can look at it on a country’s comparative advantage and what they make and produce and at what cost. Look at it from a personal level: What my comparative advantage is, is what is my gift. What is my superpower relative to everyone else on the team? If you look at it from a business standpoint, what I could be doing versus all my other alternatives, what I focus on. Also, whoever else is on the team trying to go build a business or achieve a vision, what I could be doing, relative to them and relative to their comparative advantages. My comparative advantage, compared to my father, is completely different. My father, his comparative advantage is abstract concepts, because he’d studied philosophy his entire life. He studied the philosophers that you mentioned, Hayek, von Mises, Milton Friedman. The list goes on and on, Joseph Schumpeter. He also studied Lenin and Marx and applied the scientific method to understand the opposite of what he believed, to refine his own views in terms of how to build a business, how the world works. My comparative advantage is more around that I’ve discovered over time through lots of failures, and I talk about this in the book. My comparative advantage is much different. I think I got more my mom’s comparative advantage around working with people and understanding people and understanding interpersonal skills and intrapersonal skills. What I’ve learned through a lot of failure is that focus on that, and don’t try to be something that you’re not. I think that’s where my father and I would diverge. We have the same principles, but we express them much differently in business and with the social change efforts that we have.

Absolutely. I spent a lot of time with my Uncle David as well, who sadly passed in 2019. What he did for the company and just watching him in the boardroom and watching his leadership with my father to build a company that has grown 9,000-fold since the early ’60s. Watching his leadership there, that had a profound effect on me. Also, I’d say the stories of my grandfather. I never met my grandfather, but how my father has passed on what he learned from his father. A lot of this is in the book, but I’ll just share one little example with you. When my father and his older brother, Fred, were three months old, Fred Koch, my grandfather, wrote a letter that said something like this. It was the intent of when he passed away, they would open up this letter and read it. This was dated 1936. Three months after my father was born. It said something like this. “When I pass, you will inherit what seems to be a large sum of money. You can do one of two things with it. You can either squander it and live an unhappy life, or you can use it for good and apply yourself and apply your gifts and feel the glorious feeling of accomplishment. I know you won’t let me down.” That was kind of the message. A little bit of a guilt trip there for him, too. Obviously, that had a profound effect on my father because that’s the way he’s lived his life. He’s two doors down from me right now, almost 91 years old and still grinding it out because he wants to add value. He’s still co-CEO of Koch. People ask him all the time, “Why do you still do this? Why aren’t you laying on a beach somewhere?” He’s like, “What, do you want me to die? This is how I live. I want to feel that glorious feeling of accomplishment.” He’s passed that down to me. I wish I had met my grandfather. He passed before I was born. A lot of stories like that have really had a huge influence on me.

I don’t have a good physique anymore. I had shoulder surgery, so I’m not playing tennis anymore. I think my parents wanted both my sister and I to really apply ourselves. Whether it’s on the academic side or on the sports side, they said, “Really find your gift early in life.” I tried a lot of different sports, and I frankly sucked at most of them, but tennis was one of those things I had good eye-hand coordination. They were like, “That’s it. If you’re passionate about it, you need to really invest the time in it.” I did. I became nationally ranked when I was 12 years old. I was top 100 in the country. By the time I was 15, 16, and I had all these new freedoms in my life, and later curfew and all that, I had no interest in continuing to invest in tennis. I wanted to party with my friends. That’s why I started throwing tennis matches. My mother came back and told my father, like, “This kid’s going off the rails. What are we going to do with him?” He pulled me into his room and said, “You either give 100 percent on the tennis court, or you’re going to get a job. You’re not going to be a country club bum.” I said, “Fine, get me a job.” Overnight, I went from being, frankly, a tennis country club rich kid to shoveling cow shit and digging post holes 12 hours later because he sent me to a feed yard. I always tell people, even though I really despised what he did at the time, that might have saved my life. Being in the position I was in with the resources that my family had, and going down the path of trying to feel what my grandfather said, is the glorious feeling of accomplishment, instead of going down the rich kid path that doesn’t apply themselves.

Oh, man. Wow.

What a question. I think I have a little bit of recency bias, Tyler, because I just watched the documentary last week, Rafa. Have you seen that? Oh, you’ve got to watch it. I think it brought tears to my eyes probably four or five different times because I grew up watching him. I like all of them for different reasons, but Rafa Nadal, just his grit and what he overcame. I’m a little bit of a stoic at heart. I read all the stoic philosophy. I’m a big fan of Ryan Holiday. One of the books that had a huge influence on me was The Obstacle Is the Way. When you look at Rafa’s life and the injuries and the things that he had to fight through to become the best in the world, it’s just an incredible hero’s journey story. Also, what a gentleman he was as well, and how he treats other people. He’s not this guy that, because he’s number one in the world, he thinks he’s above everyone. The way he treated his girlfriend, his wife, the people around him, his coaches, other players, I think he’s a model for tennis.

Yes, that’s right.

Oh, wow. Boy, you’re taking me back here. 1992, I’ve never been on a trip like that. I’ve been to two or three different Olympics. Going when I was 14 years old, experiencing that three-week journey with my father, and we accidentally stayed at the same hotel as the ’92 Dream Team. I got to at least say hello to some of the players. I don’t know why my brain keeps going to Charles Barkley.

His courage to say it like it is. He wasn’t the best basketball player of all of them, but I always admire him. They called him the round mound of rebound. I remember that. He hated that nickname. I always liked him. I remember my father and I had an interaction with him on the elevator. My dad was like, “I’ve always admired you because you always tell it like it is.” He goes, “Well, you have to tell it like it is because the press is never going to let the truth get in the way of a good story.” Just seeing him now with Shaq and Kenny on their NBA show, there’s nothing better.

It’s incredible. I hope they keep going.

Yes, but there’s nothing better than the Shaq-Charles arguments, and they start going at it. That’s the best TV you can get, in my opinion. I’m a basketball guy, being from Kansas, being a basketball kid. I love that stuff.

I was. I’m friends with R. C. Buford, who’s the GM of the San Antonio Spurs, because he’s from Wichita originally. I’ve known him for decades. Of course, I want to support my friend. I like the Spurs. I thought they had more talent. I think they’re young. I think they have the culture. I think they have the organization and the team. They have the values and principles. I’ve compared a lot of notes with what R. C. did with Popovich over the years and how they won so many championships. They’re a culture-first organization. They don’t put up with prima donnas. That’s exactly how we think about talent at Koch, and how we’ve built one of the largest private companies in the country is through a differentiated talent model. Even though they lost this year, I think they are set up so well because of the youth of the team, but also just their overall mindset and their principle and values-driven approach.

Yes. I would say, is he willing to learn? That’d be my question. Just like we talk about in the book, all of our failures. I’ve had plenty of failures. My father’s had plenty of failures in business. Do you learn through values and principles to dig yourself out of the ditch, or do you just say, “Oh, I’m perfect, and I’m right, and there’s nothing I did that was wrong and it was someone else’s fault?” If that’s the case, yes, I would say they need to get rid of him. If he can learn from it, maybe he can be a great team player going forward.

Oh, wow, that’s a good question. With Spotify, I think the consumer captures all the value. I love it as a platform. It knows me. It knows what I like, what kind of music I like. It feeds me. It’s very user-friendly, but the artist doesn’t capture any value. I play in a band. We’re only three or four years old, but the checks that we get for something like 5 million listens over time, I put myself in other bands’ shoes, that that is their living. It’s hard to reconcile the value creation relative to the value capture. What it’s causing the industry to do and artists to do is figure out new methods of monetizing their talent and their value. They’ve got to tour. They’ve got to sell merch. They’ve got to associate themselves with brands. It’s just a totally different model disrupted by these DSPs, for sure.

I don’t disagree with it. I think that makes sense. I will say that given the technology that’s available, the perfect processing of a song that you listen to now and how every artist has that technology at their fingertips and they can record it at home now almost on a phone with high quality, I think that’s very different than listening to an old 1970s Led Zeppelin album, where you feel that you can tell that was in the studio and the grit of the song and the album. I think that’s different. I just think there’s been so much innovation in the space that there’s a good and a bad to it. I think anyone can sound polished and perfect with the technology that we have now, but sometimes you like that old grit of a song from Pink Floyd, or Led Zeppelin, or Grateful Dead, or whatever the band is.

Oh, boy, that’s a good question. It’s hard to put myself in a 13-year-old’s shoes. I have three kids, and my oldest just turned 14. I don’t know. All I can speak to is my own experience in that I hope kids find the music that transforms them because music is a feeling. What you’re talking about is my experience. I think I was 11 actually when my sister played Pink Floyd The Wall, and it was the David Gilmour guitar solo from “Comfortably Numb.” It hit me so viscerally that that was my hook into music and sunk its teeth into me, and I never let go. Music isn’t for everyone, but whether it’s art or reading or dancing, I’d encourage anyone to find that thing because while we all have our work and we all have what we’re doing, I think everyone needs that one thing to help them self-actualize and live the happiest life possible. For me, music has done that not only because I love it and just experiencing it and going to a live show, but what I’ve learned from going to so many concerts from so many different bands and even DJs over the years is the power of music to unify people. It’s the common language that we all have globally. Frankly, that’s why I founded Stand Together Music by basically leveraging the power of music to unify people, and then our Stand Together platform that works on issues like poverty, criminal justice, mental health, transforming education. The power of music and artists that have really big followings that want to get engaged but don’t have a way to really drive change. That’s where we come alongside them and help them push the easy button because we have that platform. I know that wasn’t your original question, but that’s what excites me the most about music and why music is a huge part of my life. Not only, yes, I play in a band, but we can drive change with it, too. It’s very exciting.

Well, I didn’t really follow them around. I would say it was the jam band community more broadly. I loved Phish, Widespread Panic, String Cheese Incident. There was some Dave Matthews in there as well. I think it’s the fact that you go to the shows with a jam band—Grateful Dead, they’re the ones that pioneered this, right? You have no idea what you’re going to get. The element of surprise at a live show. I didn’t really always listen to them on the radio. I didn’t buy them for their albums. It was more of the community aspect of it and the fact that everyone was there because they didn’t know what they were going to get, and these fabulous musicians were going to put on a great show. Then the friendships that come from that community, that I still have long-term friendships from back in my early ’20s that we all get together. Back to where I was saying before the power of music to unify people, that’s what the jam band community does. That’s why I still love it.

I had my phases. My first business, Tyler, was when I was 15 years old and one of my best friends to this day, Askia Ahmad, he was wiring up car stereos and building custom boom boxes and all that. We basically built a business out of my parents’ garage because they had all the tools and materials and everything. Like, “Let’s build a business out of here. My parents hopefully will pay for the machinery, and then we can sell these boom boxes to our friends at high prices and capture a big margin.” Through that, I learned about the whole gangster rap. Your listeners may be surprised, but it started with me, Public Enemy, N.W.A., Eazy-E, of course—

Dre.

Snoop.

It’s so good, so good. Yes.

Snoop? Okay. This goes back to what I was mentioning on the power of music to unify people. For the listeners that don’t know, it’ll give context to your question. Stand Together is an organization that has really a community of like-minded leaders that all believe in one thing, in the power of human potential, and that every human has a gift. We all know that there’s so many barriers in society that are holding people back, whether it’s barriers in education, barriers in regulation, so you can’t start a business, barriers in our criminal justice system, you name it. What Stand Together does is we have basically a comprehensive strategy that addresses everything from education to policy to bottom-up empowerment in communities to drive real social change. I’ve been a part of this for as long as I can remember. My father’s been working on social change for 60 years, and now I’m in a position where I’m co-chairing it with him. My passion for music, as you can see from your last line of questioning, with Stand Together and that whole community, we never tapped into culture. When I say culture and what the next generation pays attention to—sports, music, YouTube, entertainment, creators, media. During COVID, I had this idea that we’ve never tapped into music to drive social change. Now is the time. Why? Because artists aren’t on tour. They want to help. Everyone’s going through this terrible pandemic. How can we leverage the power of music to help people? I founded this concept, Stand Together, Jam Together, where we got on Zoom and we got the whole Stand Together community all piling in. Everyone was in their homes, they couldn’t do anything. I got some of my friends that were artists to come on. It was Matt Sorum from Guns N’ Roses, Michael Kang from String Cheese Incident. We had some of the Blues Traveler guys. Then we had a few experiments. Then the third show, I had a friend, Pastor Omar Jahwar, that was very close with Snoop. Pastor Omar, we had worked with him on trying to disrupt gang violence through a group called Urban Specialists based in Dallas, Texas. He got Snoop on. I knew Snoop was big on criminal justice reform. This was right after all the George Floyd stuff happened. It was really a moment that people wanted to air things out and talk about the injustices of our criminal justice system. I had my father on the show interview Snoop Dogg on basically everything, the impact of the war on drugs and basically the criminal justice system, and how our approach is lock them up and throw away the key, don’t give people second chances. That was really how Stand Together Music was born, is through Stand Together, Jam Together, an online Zoom platform.

All of a sudden, we realized, “Wow, we have something that artists want. They want the ability to drive social change and be able to push the easy button.” For Snoop, it was criminal justice. For Matt Sorum, it was addiction with The Phoenix and what we’re doing there. We’ve created a movement called One Million Strong, where we’ve had more than a million people that have transformed their lives with The Phoenix. Anyway, I could go on. I’m very passionate about this. It’s very exciting what we started with folks like Snoop and where it’s headed now. We have meaningful movements, great partners like Live Nation, AEG. We’re at all the festivals, Coachella, Stagecoach, the Breakaway festivals, where we’re getting to more people at scale through music with these ideas on how we help people.